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How to account for a Stock Spin Off

Angie Rauscher -

If you are entering a simple stock split (not a spinoff), we strongly suggest using the split tool in Moneydance. To enter a split, open the Security Detail screen, click History, then enter the split in the lower half of the History window. To account for a stock spin off, use the instructions below.

Here is how I accounted for the spin off of AOL from Time Warner along with the Cash in Lieu of sale that took place in December 2009. This same method should work for any stock spinoff.

STEPS
1. Determine the original acquisition date and calculate the correct adjusted cost basis using published material from the issuer. This can be found by Google search for the transaction i.e. Time Warner AOL Spin Off.
2. Create the New Security with the correct symbol.
3. Enter the transactions to remove the original position and replace it with the two new positions reflecting the original date and the adjusted cost basis for each new position.  If you're not sure of the adjusted cost basis, you should be able to get this information from your broker or financial adviser.
4. Enter the Sell for the fractional shares at the current date.

ENTER TRANSACTIONS

DATE                              ACTION                  SECURITY                SHARES                  AMOUNT
Spin Off Date                   SellXfr              Original Company          Total Shares                  $0.00
Original Purchase Date    BuyXfr              Original Company         New # of Shares     Adjusted Basis
Original Purchase Date    BuyXfr              New Company           Shares + Fractional   Adjusted Basis
Spin Off Date                      Sell                  New Company            Fractional Shares        Proceeds

This should leave you with the original acquisition dates for the two securities as well as their correctly adjusted cost basis. And it should leave you with the proceeds of the fractional sale along with the correct capital gain/loss information for the fractional shares that were sold.


Thanks to Moneydance customer FatRaiderFan for writing this FAQ!

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